WASTE TO ENERGY: Incentives for MSMEs for Environmental Investment

Transcription

1 MINISTRY OF ENVIRONMENT REPUBLIC OF INDONESIA WASTE TO ENERGY: Incentives for MSMEs for Environmental Investment LAKSMI DHEWANTHI Ministry of Environment of Indonesia Cebu, September

2 Outline Background Policy on incentives for MSMEs Waste to Energy by MSMEs Remarks 2

3 Background Financial support for management of waste has always been problematic particularly true for micro, small and medium enterprises (MSMEs); To anticipate the current energy crisis as well as climate change related issue utilization of wastes as to become alternative sources of energy is one of solution; The GoI, therefore develops incentive schemes to support adoption of various technologies to convert wastes into energy, esp. for MSMEs. 3

4 WHY MICRO, SMALL AND MEDIUM ENTERPRISES (MSEs)? Volume of MSMEs more than 99% and significant to Indonesian economic; By numbers, significantly contribute to load of environmental pollution; Potentially to improve environmental performance: recycling industries, composting. Medium Small Micro 0.5% 1.5% 98% 42,398 Million Unit Yet, only 15% of micro and small enterprises in Indonesia have get access to existing financial sources. 4

5 Why Bank can not finance MSEs? 1. In terms of administration matter: MSMEs often provide insufficient or unfeasible collateral Inadequate financial reports and/or business licenses 2. The MSMEs business are considered to be a high risk investment due to the following reasons : MSMEs whose products are regarded as innovative product, MSMEs that need seed capital to develop new products MSMEs that are in developing stage MSMEs that need extensive funding but haven t entered their mature period MSMEs businesses which are seasonal, such as plantation and fisheries. 5

6 Environmental Policy Act 23/1997 Government shall develop and implement type of instruments (preemtive, preventive and proactive) to enhance environment management in Indonesia; Mixed Policy Approach CAC, MBIs, & partnership. Among others the instruments is economic instruments include: polluters fee, financial incentive, tradable permit, etc. 6

7 Existing Incentive Schemes Provide by MoE Soft Loan Programs Import Duty Exemption Program Debt for Nature Swap (DNS) GEF (multilateral fund) ODS Phase-out Trust Fund Subsidy/grant program for composting program Special Allocated Fund for environmental management by Local Government 7

8 GOVERNMENT INTERVENTION 8

9 Environmental Soft Loan Schemes for Environmental Investment Target Groups JBIC-PAE IEPC-KfW 1 IEPC-KfW 2 DNS (Debt for nature Swap) All scales of enterprises SMEs SMEs MSEs Banks 5 National Nasional (State own/private) 4 Regional banks + 1 National Bank 2 APEX Bank, 4 Regional Banks + 1 National Bank 1 Syariat Bank Type of credit Investment Investment Investment (75%) + working capital (25%) Investment (60%) + working capital (40%) Interest Rate (effective) Equal to Central Bank Rate 11 14% pa Minimum 2% below market syariat (equal to 10 13% pa) Technical Asisstance -none - Regional Consultant Technical Asisstance Unit (TAU) Technical Asisstance Unit (TAU) 9

10 MINISTRY OF ENVIRONMENT REPUBLIC OF INDONESIA EXAMPLES OF ENVIRONMENTAL INVESTMENT FOR MSEs WASTE TO ENERGY 10

11 Animal Waste for BIO COOKING-GAS BEFORE, using fire woods AFTER, using biogas 11

12 Biogas for Electricity 12

13 Biodiesel unit from waste oil Recycling unit of waste-oil at Islamic School, Makassar (capacity 1 ton/day of 2 batch) Produce biodiesel for their domestic 13 purpose

14 ENERGY FROM DOMESTIC SOLID WASTE Crushed nonorganic waste Selected/ Graded Plastic, can, bottle to be recycled by other industry Biomass/ RDF Domestic Waste Mixed waste Crushed organic waste Crushed waste Composting Compos fertilizer Co-fire for cement industry -reduce volume 60% -Reduce bad-smell -reduce size -reducing methane -produce compos to be market applied by farmers 14 Source : Hidayat, rumah perubahan,2007

15 SOurce : Hidayat, rumah perubahan,

16 Further Development Utilize CDM scheme small scale, bundled and sectoral CDM Embark toward Environmental Fiscal Reform among other to address climate changer regime, i.e. carbon tax, adaptation fund, etc. Involve broaden financial institutions and stakeholders through Central Bank, other institutions, private companies, etc 16

17 Remarks Incentive schemes needed to encourage MSMEs, to improve their, both production and environmental performance. Implementation of the schemes show that financial benefits could be achieved through environmental Investment financial institutions are to see that environmental investments could be economically interesting The scheme provide a triple-win solution economic, environment and development. 17

18 MINISTRY OF ENVIRONMENT REPUBLIC OF INDONESIA THANK YOU Further Information: Assistant Deputy Minister for Incentive and Environmental Fund Ministry of Environment MoE Office, A Building, 4 th Floor Jl. DI Panjaitan Kav 24 - Jakarta INDONESIA Tel/Fax , 18